Effect of the President’s budget regarding retirement accounts

In this article: What’s in Obama’s Budget, it mentions the President’s budget would impose new limit on tax-deferred retirement accounts, while it may not seem that damaging, how would you feel if you’ve saved all that you can to build up more than $3,000,000 so that you had a very comfortable retirement and the gov’t came along and said “No, no, no … we need to tax them because they did everything the right way, er, ummm because they have too much money!”
This is by no means an in depth analysis of the effect of the president’s budget regarding retirement accounts, but it’s a quick point of view after having read an article presenting the budget.

So is this good or bad?

His assessment assumes that someone would withdrawal 6.8% of their account every year if they had $3M, since $205,000 / $3,000,000 = 6.83%. If I had that much saved, I’d only be withdrawing about 4%-4.5%/yr and index it by inflation. It wouldn’t hit 6.83% or more until after the 15th year, if it started at 4.5%. If it started at 4% which is considered SWR, it wouldn’t hit 6.83% or more until after the 19th year!Chance to achieve desired effect: 0% – well virtually since 10 years would pass before a penny was received! And that is assuming that inflation rose an average of 3% over those 15-20 years and they increased their withdrawals by that amount.

The $1M amount would be contingent on earned income to be sure, which would only hit less than 1% of the population that make that much or more in total compensation.

The same article also mentions the “Buffet Rule” that the President proposed. Although even Warren Buffet himself wouldn’t be hit with the “Buffet Tax”, because his annual compensation is well under $200,000 according to this article on Wikipedia.How about simplifying it more than it was written originally, if he wants to ensure that those making a lot of money are guaranteed to pay more in taxes? To actually have any effect, the rule should be: “Any compensation from all sources including adjusted gross income, and any dividends or capital gains received from investment accounts that are received in the amount of $1,000,000 and over are taxed at a fixed rate of 30%.”.

In summation, I believe that it is only the upper middle class (when they withdraw money from their investments only) and also people who are $1M income earners, not live off of dividend/investment income and who are past retirement age.